Game-Theoretic Demand-Side Management With Storage Devices for the Future Smart Grid

We study the demand side management (DSM) problem when customers are equipped with energy storage devices. Two games are discussed: the first is a non-cooperative one played between the residential energy consumers, while the second is a Stackelberg game played between the utility provider and the energy consumers. We introduce a new cost function applicable to the case of users selling back stored energy. The non-cooperative energy consumption game is played between users who schedule their energy use to minimize energy cost. The game is shown to have a unique Nash equilibrium, that is also the global system optimal point. In the Stackelberg game, the utility provider sets the prices to maximize its profit knowing that users will respond by minimizing their cost. We provide existence and uniqueness results for the Stackelberg equilibrium. The Stackelberg game is shown to be the general case of the minimum Peak-to-Average power ratio (PAR) problem. Two algorithms, centralized and distributed, are presented to solve the Stackelberg game. We present results that elucidate the interplay between storage capacity, energy requirements, number of users and system performance measured in total cost and peak-to-average power ratio (PAR).